Interest
The cost of borrowing money
The 5 foundation
1. $500 dollar emergency fund
2. Get out of debt
3. Pay cash for your car
4. Pay cash for college
5. Build wealth and give it away
Assets
Item that has value
Common stock
Regular stock that most used
Stock
Share of a company
Preferred stock
Get distribution 1st
Economics
Satisfying your wants and needs in a world of scarcity
Scarcity
not having enough of something
Shortage
Determined by the producer
Utility
satisfaction
diminishing marginal utility
You like something the less you use it
factors of production
Capital - physical - human
Entrepreneurship
Land
Labor
production possibilities curve
Show efficiant use of resources
Sunk cost
Things you cant get back
Ex. Time
5 powers of economic thinking
1. resources cost more than you think
2. prices are signals to producers and consumers
3. all economic behavior is rational
4. all economic decisions are made at the margin
5. people are maximizers
3 economic questions
What to produce? How to produce? For whom to produce?
Planned economy
Socialism
Communism
market economy
Little government involvment, profit motive, competion for costumers, invisible hand, rely on and capital goods, specialization and efficancy
mixed economy
Little bit of 2 or more
Traditional Economy
The same methods are used after generation after generation, decisions are made by habit
Supply
What sellers are willing and able to offer for sale
On graph line goes up
Demand
What buters are willing and able to purchase
On graph line goes down
Equalibrium
Anything above the equalibrium is a surplus
Anything under the equalibrium is a shortage
Price floor
Is the lowest a price can be
Price ceiling
Is the highest a price can be
emotional advertising
Appears to your emotions
Glittering Generalities advertising
Everything is great
slice of life advertising
We understand
testimonial advertising
Famous person someone you can trust
Band wagon advertising
Join us!
Bait and Switch Advertising
One thing is advertised and another is sold
Sole proprieter
Single owner ship, own boss, makes all the profit,
Joint ventures
Partnerships are for a limited time/specific person
Limited partnership
One person has the voice/ one has the money
Corporations
Most important in the U.S, seperate from stock holders , can own propery, sue and can be sued, many owners acting as 1, pay taxes
Franchises
Pay a percentage or a flat rate to use copywrited information. Must comply with corporations rule
Co operatives
Consumer - consumers join together to purchase at better prices
Producer- producer join together to sell products
Service - people provide services to trade
Perfect competition
Many buyers and sellers, identical products, information is easily obtained, easy entry and exit, sellers are price takers
Barriers to entry competition
Resource, copywriter/patent, technology
Monopoly (imperfect competition)
Single seller, no close substitute, no entry barriers but investment is high, seller determines the price
economies of scale
Cost decreases as output increases
price discrimination
Have some control over prices, can divide customers into groups, product is usually used on the spot
natural monopolies
No one else can do it cheaper, lower total cost
monopolistic competition
Many buyers and sellers , product is similar, easy entry and exit, low barriers to entry, sellers only have little control over prices
Unions
An association of workers, formed to bargain for better working conditions and higher wages.
Closed shop
Must join union - outlawed now
Agency shop
Don't need to join union, but must pay "fair share
Union shop
Must join a union after a certain period of time
Taft Hartley act
Banned mandatory union membership
collective bargaining
A planned meeting to negotiate a contract
Mediation
Use of neutral mediator to try and find a solution. Solution offered is non binding
Arbitration
Neutral party is used to find a binding solution.
Strike
And organized stoppage of work
Injunction
Court order to go back to work
Lock out
Refusal to work
absolute advantage and comparative advantage
Absolute advantage Is what an entity can absolutely do more efficiently but comparative advantage is more important
Protective Tariff
Protect businesses inside a country
Dumping
The practice of exporting goods at a price that is below the price in exporting country
Off-shoring
When it moves some of its operations to another country
VER
Voluntary Export Restraint
Breton Woods Conference
44 nations showed up, in 1944, final negotiation of the IMF & the world bank took place
IMF (International Monetary Fund)
Gives short term loans
World bank
Gives long term loans
Functions of the IMF
Surveillance (like a doctor)
Technical assistance (like a teacher)
Financial assistance (like a banker)
Types of foreign aid
Economic - loans, grants, equipment
Technology - engineers, teachers
Military - build up protection
Development
The process by which a nation improves the economic, political, and social well being of its people
Characteristics to determine level of development
1) per capita GDP
2) energy consumption
3) labor force
4) consumer goods
5) literacy
6) life expectancy
7) infant mortality rate
GDP formula
C+I+G+NX
C - consumer
I - business investment
G - government
Nx - net exports
Who can move the money supply line?
Banks
Who can move the money demand line?
Businesses, individuals, government
Gross domestic product
The total market value of final goods and services produced in 1 year
Types of Unemployment: Frictional
...
Breton Woods Conference
44 nations showed up, took place in 1944, final negotiation of the IMF & the world bank took place
IMF (International Monetary Fund)
gives short term loans
Functions of the IMF
Surveillance (like a doctor)
Technical assistance (like a teacher)
Financial assistance (like a banker)
Foreign aide types
Economic - loans, grants, equipment
Technology - Engineers, teachers
Military - Build up protection
development
the process by which a nation improves the economic, political, and social well-being of its people
Characteristics to determine level of development
1) per capita GDP
2) energy consumption
3) Labor force
4)Consumer goods
5) Literacy
6)life expectancy
7) infant mortality rate
What are the 3 functions of money?
1. medium of exchange
2. unit of account
3. store of value
Who is the chairman of the Federal Reserve?
Jerome Powell
What is the main purpose of the FAC
The people who say yes to the FOMC
What are the 3 basis of money?
Representative, Fiat, Commodity
Which Fed district are we in?
San Francisco, 12
Investors may choose mutual funds because
A. Risk is higher
B. There are more options
C. Portfolio diversification is guaranteed
D. Cannot be done online
C. Portfolio diversification is guaranteed